Sources: The Bank of Japan may not raise interest rates at the April meeting

According to five sources familiar with the Bank of Japan's thinking, it is unlikely that the Bank of Japan will raise interest rates next week. The diminishing hope for a quick end to the Middle East conflict has left Japan's economic and price outlook still full of uncertainty. Although the final decision still carries some uncertainty and will depend on the progress of peace negotiations between the U.S. and Iran, the aforementioned sources stated that the central bank is inclined to maintain the status quo this month to allow more time to assess the impact of this conflict.

One source said, "Given the current level of uncertainty, the Bank of Japan may consider it feasible to maintain the status quo this month." Another source expressed the same view. A third source stated that the Bank of Japan is unlikely to raise interest rates because the market has already fully priced in the possibility of no rate hike this month. These sources indicated that even if the Bank of Japan keeps interest rates unchanged next week, given the escalating inflationary pressures, the bank is likely to signal its readiness to raise rates as early as June.